The Economics of Global Environment - Catastrophic Risks in Theory and Practice
The history of the axiomatic approach to the ranking of infinite streams starts with Koopmans' (1960) characterization of the discounted utilitarian rule. This rule, however, meets Chichilnisky's axiom of dictatorship of the present and puts future generations offside. Recently, Lauwers (2010a) and Zame (2007) have uncovered the impossibility to combine in a constructible way the requirements of equal treatment, sensitivity, and completeness.
This contribution presents and discusses different axioms proposed to guide the ranking of infinite streams and the criteria they imply. The literature covered in this overview definitely points towards a set of meaningful alternatives to discounted utilitarianism.